Importance of "Compliance Sounds" Ringing from the Rooms of Top Management
There are two aspects of any approach; one is theoretical and second is practical. Theoretical is the one which is "What should be" and the practical one is "What Actually Happens".
Everyone accepts the fact of being compliant and no one appreciates being non-compliant. This is a theoretical angle.
Have you ever heard any story or seen any movie where it ended with the moral of "Non-Compliant or Fraud or law breakers win the game"? Answer is NO.
But if we follow the theoretical aspect of "being compliant" then no one needs any audits, reviews or inspection, checks and balances or even there is no requirement of "Compliance Department/team/officer" because everyone accepts, respects and follows the fact of being compliant.
Everyone accepts the fact of being compliant and no one appreciates being non-compliant. This is a theoretical angle.
Have you ever heard any story or seen any movie where it ended with the moral of "Non-Compliant or Fraud or law breakers win the game"? Answer is NO.
But if we follow the theoretical aspect of "being compliant" then no one needs any audits, reviews or inspection, checks and balances or even there is no requirement of "Compliance Department/team/officer" because everyone accepts, respects and follows the fact of being compliant.
But is it something so simple? Is this theoretical approach followed? Do all corporations comply with the laws? Do they comply in its true spirit? Do organisations and their employees understand the importance of Compliance? Is the Compliance followed strictly and not a tick box exercise?
A recent survey from the participants on RAW Compliance's AML Masterclass suggests that the majority of participants think their compliance culture has improved in recent years but still more work is required. Thus, it seems we all know the answers to the above questions and perhaps there is one answer for all which is a big "NO".
If we further go down and do the RCA of the answer; we will find that the problem lies in the mindset of the Senior Management which can be top management and/or middle management.
A recent survey from the participants on RAW Compliance's AML Masterclass suggests that the majority of participants think their compliance culture has improved in recent years but still more work is required. Thus, it seems we all know the answers to the above questions and perhaps there is one answer for all which is a big "NO".
If we further go down and do the RCA of the answer; we will find that the problem lies in the mindset of the Senior Management which can be top management and/or middle management.
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To understand it better, let me explain with the help of a simple and real life example which is connected with our daily life. The example of a joint family.
In the joint family we have grandparents, parents and kids. Let us take grandparents as Senior Management, parents equivalent to Middle Management and kids as our last level of employees. In such families kids react or perform depending upon what their grandparents and parents behave. They do quite similar to what they see and if their seniors have a control and an eye on them to take required corrective action chances of their diversion to the wrong side of life is quite less. Similarly parents get the learning from their parents but sometimes get impacted by their surroundings. What controls them and keeps them under the right direction is the culture created by their parents and education/training given to them during their grown up time.
Now let us apply the same concept to the corporate world. It is no different from a joint family where actions of the Senior Management and Middle Management decides their approach and respect towards Compliance, rules and norms. Such an approach will decide how the employees at the implementation level react and deliver. In other words, if the message to respect the Compliance is coming in its true sense, it will hit the heart of every employee of the organisation and they will follow without if and buts, but if it is other way round compliance will be nothing more than a tick a box exercise.
In the joint family we have grandparents, parents and kids. Let us take grandparents as Senior Management, parents equivalent to Middle Management and kids as our last level of employees. In such families kids react or perform depending upon what their grandparents and parents behave. They do quite similar to what they see and if their seniors have a control and an eye on them to take required corrective action chances of their diversion to the wrong side of life is quite less. Similarly parents get the learning from their parents but sometimes get impacted by their surroundings. What controls them and keeps them under the right direction is the culture created by their parents and education/training given to them during their grown up time.
Now let us apply the same concept to the corporate world. It is no different from a joint family where actions of the Senior Management and Middle Management decides their approach and respect towards Compliance, rules and norms. Such an approach will decide how the employees at the implementation level react and deliver. In other words, if the message to respect the Compliance is coming in its true sense, it will hit the heart of every employee of the organisation and they will follow without if and buts, but if it is other way round compliance will be nothing more than a tick a box exercise.
To conclude; Corporate world can be compliant in its true sense only when we build confidence with the actions of Senior Management as their actions are real sounds touching the ears and heart of people working for their organisation. This is not a day's work and not for a day itself. It needs effort and patience and the most important point is that it needs "everyday mindset of being compliant irrespective of the outcome" as it is a journey with long lasting results.
Based on personal experience and Written by Ms. Samta Ahuja, Independent Consultant and Adviser with two decades of experience in the field of Compliance and AML.